I Want To Retire at 50 With $5 Million But Need to Shift From Stocks to Bonds: How Do I Rebalance Efficiently?
David Beren
Thu, January 8, 2026 at 12:50 PM EST
5 min read
One of the most important things anyone can do as they get close to retirement or even start thinking about retirement is to re-evaluate their entire financial portfolio. For most people, this means rebalancing everything so there is some level of safety against market volatility.
In the case of one Redditor posting in r/ChubbyFIRE, there is a question about how to best handle their after-tax asset allocation. Halfway to financial independence, the family is looking at whether their current asset allocation can be better balanced.
Key Points
-
The family has $2.6M at age 42 and saves $100K annually toward a $5M goal by age 50.
-
They hold 90% in stocks but want 60/40 by retirement. Gradual rebalancing over 8-10 years avoids forced selling in a down market.
-
Directing new $100K annual savings into bonds or international assets rebalances the portfolio without triggering immediate capital gains.
-
Have You read The New Report Shaking Up Retirement Plans? Americans are answering three questions and many are realizing they can retire earlier than expected.
The Current Allocation
As it stands today, this 42-year-old father of two and his wife have a current net worth of approximately $2.6 million. Their goal is to double this number to $5 million in the next 10 years, so by the time his 40-year-old wife hits 50.
To achieve this goal, they are currently saving around $100,000 annually, and given their current after-tax bucket, they have around 90% of their current investments in stocks. The challenge is that by the time they retire, in 10 years or so, they want to be close to a 60/40 allocation between stocks and something else.
The current problem is that to rebalance everything, they know they need to work within the confines of what is possible tax-wise. The Redditor has considered selling some of their portfolio to pay off their $700,000 mortgage or shifting a large percentage of their net worth to bonds. Still, awareness of the potential tax implications is causing them to pause.
The concern is that waiting until 50 to rebalance the portfolio feels too late. While this may or may not be true, the Redditor is certainly entitled to feel a certain way about how to manage the family's financial portfolio best.
What To Do Next
First and foremost, there doesn't really seem to be a need to make any radical changes right now for the Redditor's portfolio. Having $2.6 million at 42 with the ability to continue adding another $100,000 every year is fantastic and feels financially stable.
It really does feel as if hitting $5 million by 50 is a very realistic, even if the markets are only modestly favorable toward investors over the next 10 years. The real issue isn't a question of whether or not this family is on track financially, but there is a concern over being so overexposed to US stocks, which make up much of their portfolio right now.
Story Continues
Ultimately, the smart play here is to take on gradual rebalancing and not wait until the last minute. The hope is that this is more of a slow-moving train that has the Redditor slowly adding bonds or alternative investments (think not US stocks) over the next 8-10 years, so they don't have to sell in a down market once they hit their financial independence, retire early (FIRE) and age goal.
Ideally, since it makes sense to make some gradual moves, the Redditor will have to accept some capital gains. However, the family can mitigate this by only making small moves each year to spread out the tax hit over the next 10 years. Better yet, with the $100,000 that is being added to their savings every year, they should be funneling this money into bonds, REITs, or something else with more international exposure.
Make Smart Investment Moves
While paying off the 4.5% interest on a mortgage of $700,00 sounds questionable, it is a smart play for many reasons. The downside is that it will eat up liquidity, but it's a reasonable substitute for bonds right now since you wouldn't pay any taxes on the money spent.
Of course, you could also pay the mortgage down a little slower, as in not all at once, while also adding bonds, so there are some options. The biggest thing to consider is that if there is a concern about too much risk, trimming some equities right now might be worth the tax hit.
At the end of the day, the smart move is to rebalance slowly, all while using the future $100,000 in annual savings to make bigger waves in rebalancing. As far as the mortgage goes, you could look at extra steady payments to help pay it off faster without losing so much liquidity, which means the invested money will continue to earn.
Finally, adding more money to bonds or international equities is the right approach for now. Reducing a dependency on U.S. stocks isn't a bad strategy, especially as the world sits in a state of international trade and tariff flux.
The New Report Shaking Up Retirement Plans
You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.
The good news? After answering three quick questions many Americans are reworking their portfolios and finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.
View Comments